The Russian Political and Economic Climate

Ambassador Frank Wisner, Vice Chairman of American International Group (AIG) and former ambassador to India, shared his perspective on US-Russian business and political relations. While he thinks that US-Russian relations have improved remarkably over the last decade, he noted that there is a "substantial degree of reassessment" about where Russia is headed among policymakers in Washington, American businessmen, academics, and the press. Russian President Vladimir Putin's consolidation of power into the Kremlin has cast a cloud over Russia's nascent market economy and democracy, he said. Russian reformers suffered major losses in the recent parliamentary and presidential elections, while regional leaders and state bureaucrats loyal to the Kremlin ("silovikis") are on the ascent.

Ambassador Wisner said that for Western businesses, this means that their "client" is President Putin, which has pluses and minuses. The advantage is that Putin has brought stability to the country and enjoys overwhelming support of its citizens. This in many ways makes Western investment in Russia less volatile than it was in the 1990's, when the threat of a Communist resurgence was real. Now Western companies know in no uncertain terms that if they want to do business with Russia, they must first and foremost appeal to Putin. The disadvantage is that Western businesses are accustomed to protections beyond just the will of the executive.

Despite Ambassador Wisner's words of caution, he on the whole maintains an optimistic outlook and continues to help American International Group explore and expand its insurance and mortgage businesses in Russia: "We are not shy about the market that we see – with strong economic conditions and new stability."

Offshore Outsourcing to Russia

Tsvi Gal, Chief Information Officer of AOL Time Warner Music, spoke about the great opportunities he sees for collaboration and innovation between American and Russian companies. Gal noted that Russia produces highly educated and motivated technology workers, whose creative approach to solving complex tasks differentiates them from other global talent. This flexibility is "one of the strong points of DataArt and other Russian companies that realize that they work in a dynamic environment rather than a pre-dictated environment," according to Gal.

Participants discussed the current American debate about global technology outsourcing – does it lead to unemployment of technology workers or provide cost savings to companies that might otherwise fail? Ambassador Wisner believes that the debate is "monstrously ill-informed," and that the "American economy's capacity to develop new jobs vastly outweighs those that are being lost." Stuart Robbins, Executive Director of the CIO Collective and DataArt Advisor, said that while global outsourcing is growing rapidly, the skills necessary for managing a global workforce are lagging behind.

DataArt President Eugene Goland said that the Russian economy is doing better then ever and that the Russian IT space is becoming an attractive target for US solution providers. DataArt has been selected by some of its clients as a strategic partner. By delivering application development services to US companies, DataArt gains the necessary knowledge that can be used later to ensure the successful entry of its clients' products into the Russian marketplace.

The Saint Petersburg Connection

Stuart Robbins shared his experiences at the Technology Leadership Forum that was held in St. Petersburg on February 4. The event brought together over 100 technology executives from leading Russian and global companies, and was attended by approximately 20 journalists. Robbins said that he went to Saint Petersburg "with a healthy degree of skepticism," but left impressed due to a variety of factors. He had a chance to personally meet some of the people running Russian businesses and found that they are as skilled as anyone that he could bring to a project in the United States. Robbins observed that there is an effort to collaborate inside St. Petersburg, as if the "entire city and business community is an incubator for innovations."

Robbins had the opportunity to meet the employees of DataArt in St. Petersburg and found that they have a strong sense of themselves as a team, that they always say "we" rather than "I," and take great pride in their work, all of which are qualities that Western companies require in a foreign partner. Robbins said that Russia is currently "positioned like the second runner in the Olympics," and will be able to do in 2-3 years what it took India 10-15 years to achieve.

Loretta Prencipe, Editorial Director of Media First and Strategic Advisor to DataArt, also shared her experience at the Technology Leadership Forum. She said that the event "raised awareness of the deep level of development talent that exists in St. Petersburg" and helped create partnerships among many of the participants. In the last seven years, over 1.3 million people have graduated from Russian universities and are working in the information technology industry. Prencipe noted that the Russian university system produces what she calls "a different breed of computer science students" than Western universities, because the Russian education system places much more emphasis on basic and complex mathematics and science and computer science programs. The complex engineering and computer science skills that were cultivated during the Soviet era have not been lost, Prencipe said, and are now being applied to complex commercial development projects.

The IBM Almaden Research Center

James Spohrer, director of the IBM Almaden Research Center, spoke about the transformation of IBM from a software and hardware company to a global services company. IBM has over 330,000 employees, half of whom work outside the United States. IBM's services are composed of three major businesses:

Business consulting services, which have grown even stronger with IBM's acquisition of Price-Waterhouse-Coopers Consulting.

A strategic outsourcing business that works with its customers to outsource their IT servers, etc.

Systems integration, custom software work.

Jennifer Trelewicz, IBM Researach Relationship Manager for Eastern Europe and Russia, spoke about IBM's interest in partnering with Russian companies and universities. IBM has created new research management positions to connect IBM clients with potential business partners in the former Soviet Union and Eastern Europe. "These relationships," said Spohrer, "will help generate the research innovations that can increase IBM's service offerings in the future."

Next Steps

Participants agreed that unifying their efforts through further discussion and business partnerships could help establish best practices for cross-national technology projects. DataArt plans to continue to engage these and other technology leaders in discussion that will help define and promote Russian IT offerings.

About DataArt

DataArt is an offshore software outsourcing company with an Advance Research & Development Center in St. Petersburg, Russia and project management capacity in New York, San Francisco, and London. DataArt leverages people, process, expertise and low cost to offer top-quality cost-effective outsourcing solutions. We have built solutions for the financial, health care, and technology industries, earning us an exceptional reputation for managing successful projects.